A Preliminary Investigation of the Optimal Percentage Requirement in an Electricity Market with Tradable Green Certificates

Kevin M. Currier, Susanne Rassouli-Currier

Oklahoma State University, Stillwater, USA.
University of Central Oklahoma, Edmond, USA.

DOI: 10.4236/tel.[phone]                

Abstract

Around the world, energy markets are being liberalized with the goal of achieving fully competitive markets while at-taining environmental policy objectives. This paper considers a system of Tradable Green Certificates (TGCs)—a mar-ket based regulatory instrument designed to promote electricity generation from renewable energy sources. In a TGC program, the principal policy instrument is the “percentage requirement” which stipulates the percentage of total elec-tricity generation that must be obtained from renewable sources. This paper provides a preliminary investigation of the socially optimal choice of the percentage requirement in a Cournot duopoly setting. The paper discusses the problem geometrically and considers some of the practical difficulties associated with the determination of the optimal percent-age requirement. Several important avenues for generalization of the results are also discussed.

Keywords

Renewable Energy; Tradable Green Certificates; Percentage Requirement; Renewable Portfolio Standard

Conflicts of Interest

The authors declare no conflicts of interest.

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